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Monday morning, embattled insurer American International Group (AIG) announced that it is repaying $4 billion in bailout loans to the government. 
Earlier this morning, embattled insurer American International Group (NYSE: AIG) announced that it is going to reduce its outstanding federal loans by $25 billion by giving a preferred stake in two spin-off units to the government. The two subsidiaries, American International Assurance and American Life Insurance, will be spun off into "special purpose vehicles" ahead of initial public offerings. The Federal Reserve Bank of New York will receive interests in the special purpose vehicles (SPVs), both of which will eventually become independent companies after the IPOs are complete.
The $25 billion breaks down like this: the Fed will receive $16 billion in preferred assets in American International Assurance and $9 billion in American Life Insurance. Reportedly, the outstanding debt for AIG will be cut to $15 billion thanks to this move. AIG now has as much as $182.5 billion in funding available from the government, extending the original offer of $85 billion from back in September.
Continue reading AIG will spin off units in order to reduce debt
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